Home Loan By Prakash Finance

A home loan is a secured loan wherein a bank or a financial institution lends you money to help you purchase your dream home. It is generally given for a longer duration compared to other loan types because the amount borrowed is usually higher and requires a longer repayment plan.

Types of home loans

1. Land Purchase Loans: Choose them when you buy property for either investment or construction purposes
2. Home Construction Loans: Opt for a home construction loan, if you plan to build a house over an already owned land.
3. Home Improvement Loans: Avail these when you are about to start a home repair or renovation project
4. Home Conversion Loans: Transfer your existing home loan into a new loan amount by availing a home conversion loan when you wish to buy.
5. Home Purchase Loans: Avail these when buying a new home
6. Home Extension Loans: Opt for this loan type when you plan to extend your existing home
7. Bridge Loans: Opt for a bridge loan when you plan to buy a new house while looking for the right buyer to sell off your already existing home

Characteristics of a home loan

1. It is a secured loan, that is, the lender considers your house/property as a security collateral. If you fail to pay back the loan, then the lender will become entitled to retrieve the money lent by selling your house/property.
2. The loan amount can vary, with the minimum amount being Rs. 50,000.
3. The Equated Monthly Installment (EMI) of a home loan is computed by adding the principal amount and interest.

Eligibility Criteria for Home Loan

Eligibility criteria might vary from one lending institution to the other, but there are some common requirements:

1. 1. Any salaried, self-employed or business person with Indian nationality can apply for a home loan
2. 2. You must be aged 21 years or above
3. 3. You should have a regular source of income for timely repayment of the loan
4. 4. Your professional stability and savings history will help in quick loan approval
5. 5. Ensure that you do not have bad credit history for at least the three months prior to applying for a home loan.
6. 6. If you are a salaried professionals, about 40% of your monthly gross income can be availed as loan amount.
7. 7. For self-employed individuals, profit earned by you majorly determines the loan value you are eligible for.

Documents Required for Home Loan

1. Duly signed and filled application form
2. Passport-size photograph
3. Statements of investments, if any
4. Copy of plan approved for the proposed construction/extension
5. Cost estimation or valuation report from the banks (or finance companys) panel CA
6. Allotment letter of housing board/NOC of the society/builder etc.
7. Bank statement and salary slips

In addition to these, you will have to also submit the following documents:

• Identity and signature proof
  
• Address Proof
  
• Age Proof